Quiet Bush Aide Seeks Iraq Czar, Creating a Stir

New York Times
April 30, 2007
Quiet Bush Aide Seeks Iraq Czar, Creating a Stir

By SHERYL GAY STOLBERG
WASHINGTON, April 29 — Stephen J. Hadley would be the first to tell you he does not have star power. But Mr. Hadley, the bespectacled, gray-haired, exceedingly precise Washington lawyer who is President Bush’s national security adviser, is in the market for someone who does — with the hope of saving Iraq.

Mr. Hadley is interviewing candidates, including military generals, for a new high-profile job that people in Washington are calling the war czar. The official (Mr. Hadley, ever cautious, prefers “implementation and execution manager”) would brief Mr. Bush every morning on Iraq and Afghanistan, then prod cabinet secretaries into carrying out White House orders.

It is the kind of task — a little bit of internal diplomacy and a lot of head-knocking, fortified by direct access to the president — that would ordinarily fall to Mr. Hadley himself. After all, he oversaw the review that produced Mr. Bush’s troop buildup in Iraq. But his responsibilities encompass issues around the globe, and he has concluded that he needs someone “up close to the president” to work “full time, 24/7” to put the policy into effect. He hopes to fill the job soon.

“What we need,” he said in a recent interview, “is someone with a lot of stature within the government who can make things happen.”

Even so, the idea that the national security adviser is subcontracting responsibility for the nation’s most pressing foreign policy crisis — and must recruit someone of stature to get the attention of the cabinet — is provoking criticism of Mr. Hadley himself, and how he has navigated the delicate internal politics of a White House famous for its feuding.

“Steve Hadley is an intelligent, capable guy, but I don’t think this reflects very well on him,” said David J. Rothkopf, author of “Running the World,” a book about the National Security Council. “I wouldn’t even call it a Hail Mary pass. It’s kind of a desperation move.”

Mr. Rothkopf sees the new position as “a tactic to separate the national security adviser from Iraq” — a way to save Mr. Hadley’s reputation. Ivo Daalder, a former Clinton administration official who is co-writing a book on national security advisers, said the proposal “raises profound questions” about Mr. Hadley’s “ability to put heads together and make sure that the president’s wishes are in fact his commands.”

At 60, Mr. Hadley has been around Washington long enough to know pretty much everyone in town. He arrived in 1972 to work at the Pentagon (after attending law school at Yale with Senator Hillary Rodham Clinton of New York) and has served Republicans since Richard Nixon. His relationships with Vice President Dick Cheney and Donald H. Rumsfeld, the former secretary of defense, date from the Ford administration.

He is regarded as a sharp negotiator, more of a pragmatic conservative than a neoconservative. Despite his mild-mannered appearance, he has shown flashes of toughness on those rare occasions when the White House curtain is pulled back. By one account, which he does not deny, Mr. Hadley pressed for the ouster of Mr. Rumsfeld early in Mr. Bush’s second term. He delivered a stinging assessment of Prime Minister Nuri Kamal al-Maliki in a confidential memo to the president last year.

Today, after serving as deputy to Condoleezza Rice when she was national security adviser, and then replacing her when she became secretary of state, Mr. Hadley is one of Mr. Bush’s closest advisers. He is the first person the president sees in the Oval Office each morning and a constant, sober presence on international trips. Yet he is so relentlessly low-profile that it is difficult to get a fix on his views. Even his admirers have a hard time assessing his performance.

“I’m a big fan of Steve Hadley,” said Kurt Campbell, founder of the Center for New American Security, an independent research organization in Washington. “Whether he’s in the right job, and whether it’s too difficult, I’m not really sure.”

In a city filled with people who crave the spotlight, Mr. Hadley is an aberration. Every once in a while, Dan Bartlett, the chief White House communications strategist, prods him into appearing on a Sunday morning news program, if only, Mr. Bartlett says, because he comes across as so “even-handed and credible.” Friends lament that no one sees the warm, witty Mr. Hadley that they know.

“He seems like a functionary when I watch him on television — he’s very controlled,” said Amy Dickinson, author of the syndicated Ask Amy advice column, who knows Mr. Hadley from church. “But he’s somebody who I think of in other contexts as being very warm, very funny.”

And strait-laced. One story around the White House — Mr. Hadley calls it “one of the great urban myths” — is that he wore penny loafers to cut brush with the president on his Texas ranch. Last year, during Mr. Bush’s surprise trip to Baghdad, Mr. Hadley’s concession to comfort on the overnight flight was to change out of his business suit into gray flannel pants.

“We got him to at least take his jacket off,” Mr. Bartlett said.

On Capitol Hill, Mr. Hadley has become sort of a fix-it man for the Bush White House. When Republicans like Senator Lindsey Graham of South Carolina revolted over the legislation creating military commissions to try terrorism suspects, Mr. Hadley was sent to Capitol Hill to straighten out the mess.

“He is a cross between a law school professor, an accountant and — ” Mr. Graham said, pausing for a few seconds before adding, “Jon Stewart.” Mr. Hadley, upon hearing this, did not bat an eye at being compared to the host of the Comedy Central news show but complained about the accountant reference. “An accountant?” he asked. “I’m not that great with numbers.”

But to the public, Mr. Hadley is nearly invisible. He has transformed a position once inhabited by some of the most vivid personalities in foreign affairs — among them Henry A. Kissinger, Zbigniew Brzezinski and Ms. Rice — into one that many Americans do not know exists.

“No one is ever going to talk about the Hadley era in U.S. national security,” Mr. Rothkopf said. “He is definitely this administration’s man in the gray flannel suit.”

Mr. Brzezinski said: “He’s straightforward, nice, to the point. But there’s a kind of bureaucratic regularity to him.”

That is precisely the way Mr. Hadley wants it. Some, like Mr. Kissinger and Mr. Brzezinski, have taken an expansive approach to the job, using it as a platform to advance their own ideas. Mr. Hadley, like Ms. Rice before him, sees himself as “an honest broker,” he said, “somebody who is not pushing a particular policy view.” When the big egos of the White House — the vice president, secretary of state or defense chief — disagree, he says, he presents opposing views, and Mr. Bush decides.

The White House was rife with such disputes when Mr. Hadley took his job at the beginning of the second term, and former colleagues say he quickly set about bridging the gaps — and pushing himself into the background.

“He made a very deliberate decision to let Rice be the face of foreign policy,” said Michael Green, a former top Asia specialist at the National Security Council. He also tried to smooth relations with Mr. Rumsfeld by bringing Pentagon officials onto the security council staff. But when the defense secretary fired off lengthy memos, dubbed snowflakes, to the council, Mr. Hadley firmly fired snowflakes back.

Still, questions about whether he had the backbone for the job persisted.

“A lot of people wonder, how will Hadley stand up to Cheney or Rumsfeld or Rice,” Mr. Hadley said last year, in a rare interview in which he talked about himself. “The answer is: you don’t have to. They are 600-pound gorillas, but I work for the 1,500-pound gorilla.”

That was before the 1,500 pound gorilla — Mr. Bush — fired Mr. Rumsfeld after the November midterm elections. In his book “State of Denial,” the journalist Bob Woodward writes that Mr. Hadley argued for Mr. Rumsfeld’s ouster much earlier. Mr. Hadley showed a rare flash of anger when asked about it. But, asked if it was true, he did not deny it.

“One of the things I try not to do,” he said stiffly, “is talk publicly about my advice to the president.”

With Mr. Rumsfeld gone and Mr. Bush taking a more assertive role in managing the war, people inside and outside the White House say the balance of power has shifted, and Mr. Hadley has emerged as more of a force. As Fred Kagan, a military historian who is considered the co-author of the troop buildup strategy, said, “I get the sense of a guy who is trying to do his job at a very difficult time and is actually being allowed to do it for the first time.”

That is one reason the war czar proposal has left some in Washington scratching their heads. At a recent press conference, Defense Secretary Robert M. Gates described it this way: “This is what Steve Hadley would do if Steve Hadley had the time.”

But Mr. Daalder, who is now a senior fellow at the Brookings Institution, was mystified. “If Hadley doesn’t have time for this,” he asked, “what does he have time for? Our policy toward Nicaragua?”

David E. Sanger contributed reporting.

Filler in Animal Feed Is Open Secret in China

April 30, 2007

By DAVID BARBOZA and ALEXEI BARRIONUEVO
ZHANGQIU, China, April 28 — As American food safety regulators head to China to investigate how a chemical made from coal found its way into pet food that killed dogs and cats in the United States, workers in this heavily polluted northern city openly admit that the substance is routinely added to animal feed as a fake protein.

For years, producers of animal feed all over China have secretly supplemented their feed with the substance, called melamine, a cheap additive that looks like protein in tests, even though it does not provide any nutritional benefits, according to melamine scrap traders and agricultural workers here.

“Many companies buy melamine scrap to make animal feed, such as fish feed,” said Ji Denghui, general manager of the Fujian Sanming Dinghui Chemical Company, which sells melamine. “I don’t know if there’s a regulation on it. Probably not. No law or regulation says ‘don’t do it,’ so everyone’s doing it. The laws in China are like that, aren’t they? If there’s no accident, there won’t be any regulation.”

Melamine is at the center of a recall of 60 million packages of pet food, after the chemical was found in wheat gluten linked this month to the deaths of at least 16 pets and the illness of possibly thousands of pets in the United States.

No one knows exactly how melamine (which is not believed to be particularly toxic) became so fatal in pet food, but its presence in any form of American food is illegal.

The link to China has set off concerns among critics of the Food and Drug Administration that ingredients in pet food as well as human food, which are increasingly coming from abroad, are not being adequately screened.

“They have fewer people inspecting product at the ports than ever before,” says Caroline Smith DeWaal, the director of food safety for the Center for Science in the Public Interest in Washington. “Until China gets programs in place to verify the safety of their products, they need to be inspected by U.S. inspectors. This open-door policy on food ingredients is an open invitation for an attack on the food supply, either intentional or unintentional.”

Now, with evidence mounting that the tainted wheat gluten came from China, American regulators have been granted permission to visit the region to conduct inspections of food treatment facilities.

The Food and Drug Administration has already banned imports of wheat gluten from China after it received more than 14,000 reports of pets believed to have been sickened by packaged food. And last week, the agency opened a criminal investigation in the case and searched the offices of at least one pet food supplier.

The Department of Agriculture has also stepped in. On Thursday, the agency ordered more than 6,000 hogs to be quarantined or slaughtered after some of the pet food ingredients laced with melamine were accidentally sent to hog farms in eight states, including California.

The pet food case is also putting China’s agricultural exports under greater scrutiny because the country has had a terrible food safety record.

In recent years, for instance, China’s food safety scandals have involved everything from fake baby milk formulas and soy sauce made from human hair to instances where cuttlefish were soaked in calligraphy ink to improve their color and eels were fed contraceptive pills to make them grow long and slim.

For their part, Chinese officials dispute any suggestion that melamine from the country could have killed pets. But regulators here on Friday banned the use of melamine in vegetable proteins made for export or for use in domestic food supplies.

Yet what is clear from visiting this region of northeast China is that for years melamine has been quietly mixed into Chinese animal feed and then sold to unsuspecting farmers as protein-rich pig, poultry and fish feed.

Many animal feed operators here advertise on the Internet, seeking to purchase melamine scrap. The Xuzhou Anying Biologic Technology Development Company, one of the companies that American regulators named as having shipped melamine-tainted wheat gluten to the United States, had posted such a notice on the Internet last March.

Here at the Shandong Mingshui Great Chemical Group factory, huge boiler vats are turning coal into melamine, which is then used to create plastics and fertilizer.

But the leftover melamine scrap, golf ball-size chunks of white rock, is sometimes being sold to local agricultural entrepreneurs, who say they mix a powdered form of the scrap into animal feed to deceive those who raise animals into thinking they are buying feed that is high in protein.

“It just saves money if you add melamine scrap,” said the manager of an animal feed factory here.

Last Friday here in Zhangqiu, a fast-growing industrial city southeast of Beijing, two animal feed producers explained in great detail how they purchase low-grade wheat, corn, soybean or other proteins and then mix in small portions of nitrogen-rich melamine scrap, whose chemical properties help the feed register an inflated protein level.

Melamine is the new scam of choice, they say, because urea — another nitrogen-rich chemical — is illegal for use in pig and poultry feed and can be easily detected in China as well as in the United States.

“People use melamine scrap to boost nitrogen levels for the tests,” said the manager of the animal feed factory. “If you add it in small quantities, it won’t hurt the animals.”

The manager, who works at a small animal feed operation here that consists of a handful of storage and mixing areas, said he has mixed melamine scrap into animal feed for years.

He said he was not currently using melamine. But he then pulled out a plastic bag containing what he said was melamine powder and said he could dye it any color to match the right feed stock.

He said that melamine used in pet food would probably not be harmful. “Pets are not like pigs or chickens,” he said casually, explaining that they can afford to eat less protein. “They don’t need to grow fast.”

The resulting melamine-tainted feed would be weak in protein, he acknowledged, which means the feed is less nutritious.

But, by using the melamine additive, the feed seller makes a heftier profit because melamine scrap is much cheaper than soy, wheat or corn protein.

“It’s true you can make a lot more profit by putting melamine in,” said another animal feed seller here in Zhangqiu. “Melamine will cost you about $1.20 for each protein count per ton whereas real protein costs you about $6, so you can see the difference.”

Feed producers who use melamine here say the tainted feed is often shipped to feed mills in the Yangtze River Delta, near Shanghai, or down to Guangdong Province, near Hong Kong. They also said they knew that some melamine-laced feed had been exported to other parts of Asia, including South Korea, North Korea, Indonesia and Thailand.

Evidence is mounting that Chinese protein exports have been tainted with melamine and that its use in agricultural regions like this one is widespread. But the government has issued no recall of any food or feed product here in China.

Indeed, few people outside the agriculture business know about the use of melamine scrap. The Chinese news media — which is strictly censored — has not reported much about the country’s ties to the pet food recall in the United States. And few in agriculture here do not see any harm in using melamine in small doses; they simply see it as cheating a little on protein, not harming animals or pets.

As for the sale of melamine scrap, it is increasingly popular as a fake ingredient in feed, traders and workers here say.

At the Hebei Haixing Insect Net Factory in nearby Hebei Province, which makes animal feed, a manager named Guo Qingyin said: “In the past melamine scrap was free, but the price has been going up in the past few years. Consumption of melamine scrap is probably bigger than that of urea in the animal feed industry now.”

And so melamine producers like the ones here in Zhangqiu are busy.

A man named Jing, who works in the sales department at the Shandong Mingshui Great Chemical Group factory here, said on Friday that prices have been rising, but he said that he had no idea how the company’s melamine scrap is used.

“We have an auction for melamine scrap every three months,” he said. “I haven’t heard of it being added to animal feed. It’s not for animal feed.”

David Barboza reported from Zhangqiu and Alexei Barrionuevo reported from Chicago. Rujun Shen also contributed reporting from Zhangqiu.

Another NY Times Hillary Expose

April 14, 2007
Wellesley Class Sees ‘One of Us’ Bearing Standard

By TAMAR LEWIN
For her Wellesley classmates, Hillary Clinton’s quest to become the first female president is a generational mirror. Some like what they see; others are less certain.

They were there for her fiery commencement speech, delivered at the height of the Vietnam War, when she described her class’s search for a “more immediate, ecstatic and penetrating mode of living” and said that every protest was “unabashedly an attempt to forge an identity in this particular age.” The speech landed Hillary Rodham in the spotlight as a celebrated archetype of a new generation of women.

“We were very proud of her: she was a feminist; she was outspoken,” said Jane Moss, a classmate who now teaches French at Colby College. “Hillary was speaking for all of us, for a generation that felt we weren’t being heard.”

From their days at Wellesley, where they attended Wednesday teas and fought to end parietal hours and curfews, to their pioneering careers in law, academia and science, the 400 members of that Class of 1969 have been marked by the profound shift in women’s roles that accompanied their coming of age.

Throughout their journey, Hillary Rodham Clinton has been both a standard-bearer and a touchstone to measure themselves against.

They have winced at her struggles over how to be a modern first lady and her marital humiliations, rejoiced with her election to the Senate, puzzled over how her guarded and cool political persona is so different from the warm, funny and outspoken woman they know.They still see her as the thoughtful friend who called every week after a husband died, or wrote a charming note about the birth of a grandson.

And some are raising money or volunteering in Mrs. Clinton’s effort to become the first woman elected to the White House.

“Just knowing that one of us is trying to be the first woman president is a kick in the butt,” said Jayne Abrams, executive director of a Pennsylvania nonprofit group, “enough to keep you going at an age when some of us might be thinking of slowing down.”

Mrs. Clinton’s struggles as the first woman in her Arkansas law firm, and then first lady of Arkansas resonate with her classmates, too, in their own battles as “first woman” in workplaces dominated by men, trying to navigate what now seem like quaint battles over whether a woman can take a business trip with a man, or whether a pregnant professor should get tenure.

“When Hillary had the class reunion at the White House, there were 325 of us there,” said Catherine S. Gidlow, a lawyer in St. Louis. “I turned to someone and said, ‘I think there are 324 of us here who feel like failures,’ and she said, ‘No, I think there are 325 of us who feel like failures.’ ”

But if Mrs. Clinton is elected the first female president, it will represent an enormous success, the payoff for decades of campaigning, compromising and personal challenges.

“When she came to Maine campaigning for Bill the first time, she was very stylish, very blond, very thin,” said Nancy Wanderer, director of the legal research and writing center at the University of Maine law school. “It was like she was in a Halloween costume and I thought, ‘Who is that?’ She looks more natural now. I think she’s had to tamp herself down a lot, but now that Bill’s out of the White House, it’s her chance, and I think she’s just warming up.”

The ’60s still loom large in American politics, providing the underlying text, for example, in the last presidential campaign’s debate over President Bush and Senator John Kerry’s different records in the Vietnam War. Mrs. Clinton’s Wellesley senior thesis on Saul Alinsky, the radical Chicago community organizer, kept under wraps during the Clinton presidency, has been an endless source of fascination to her conservative critics.

On the cusp of seismic social change, and because of Mrs. Clinton, the class of 1969 has been much scrutinized. A book on the class, “Rebels in White Gloves: Coming of Age With Hillary’s Class — Wellesley ’69” (Times Books, 1999), found that most came from Republican families, with homemaker mothers, but that most had at some point outearned their husbands — all like Mrs. Clinton.

“We always felt a little special, because we were the ones who were there when all the rules changed,” said Susan Doull, who has lived in Europe for the last 20 years, running hotels. “We were the last class before Wellesley was diluted by men’s colleges like Yale going coed, and Wellesley was where we began to focus on the idea that we would have careers.”

It has not been easy to mesh the sense of unlimited possibility they got at Wellesley with the practical realities of being the first generation of professional women to enter the workplace en masse.

“I went to work for Citibank for two years after college,” Ms. Doull said, “and I was supposed to take a business trip with the officer I reported to, but his wife wouldn’t let him go with me, or he was afraid to tell her. I don’t think our daughters really grasp how different things were.”

Many of the women in the class have similar stories. Lawyers tell of using the back door or the freight elevator to attend meetings at men-only clubs. Academics described difficult fights for tenure.

“The French department had never had a woman in a tenure-track position when I got to Colby,” Professor Moss said, “and when I got pregnant before tenure, they literally didn’t know what to do. When I came up for tenure, my male colleagues voted against me and I got tenure, but you can imagine my feelings at department meetings for the next few years.”

Some of Mrs. Clinton’s classmates say they take personally criticism that she is “shrill” or “strident.”

“I hear these anti-Hillary attacks by men, especially right-wing men, and I feel like it’s just as much an attack on me,” said Cheryl Lynn Brierton, an in-house lawyer for the California courts. “It’s an effect of intelligence that you come across as intense, that you have strong views. I’ve always felt that the way she is singled out and attacked is very indicative of how society reacts to smart women.”

When she herself started working, Ms. Brierton said, she had to tone herself down and find a voice that would not be off-putting. So when she hears criticism of Mrs. Clinton, she said, “I’m constantly thinking, There but for the grace of God go I.”

Ms. Abrams, executive director of ParentWorks, a nonprofit parent-education and child-abuse prevention group based in Harrisburg, Pa., also identifies with Mrs. Clinton. “In my community, I think I’m perceived as Hillary-esque,” she said. “I talk too much, I advocate and my husband says he can’t take me anywhere because I’m always trying to raise money.”

Although she is a Republican, Ms. Abrams said she might well vote for Mrs. Clinton.

“She’s a brilliant charismatic woman,” Ms. Abrams said. “When we were in college, arguing about Vietnam, she knew what she was talking about, unlike the rest of us. She’s still brilliant, she’s still charismatic, but she’s also polarizing.”

Many of the Wellesley women have watched with sadness as the Hillary they knew changed from a passionate and outspoken figure to a more guarded and careful one as she put her husband’s political career first, campaigning at his side and then finding herself in uncharted territory as a new kind of first lady.

“What was striking even at Wellesley was Hillary’s boldness, her boundarylessness; she was way off the charts in being engaged in her community and in the world, taking personally what was happening and wanting to do something about it,” said Jan Piercy, a friend of Mrs. Clinton who was appointed United States executive director at the World Bank by President Clinton.

But, Ms. Piercy said, the boldness has been tempered. “If you spend all your adult life in the public eye,” she said, “you necessarily have to create a kind of protection, a caution, that will lead to the perception that you’re joyless or calculating or not spontaneous or Machiavellian.”

Eleanor Dean Acheson, the general counsel who was in the Clinton administration’s Justice Department, said Mrs. Clinton was only now emerging from her husband’s shadow.

“What people now perceive as Hillary’s distance, the criticism that she’s cold and calculating, and does nothing without a focus group, finds its root in that she has had to be, for 25 years, in the spotlight, and in the shadow of Bill,” Ms. Acheson said. “I think she’s going to get more relaxed as this campaign goes, and show more of the personal qualities her friends have always seen.”

Some of the classmates believe Bill Clinton’s 1992 campaign seared his wife, especially the attacks on her statements about not being “some little woman standing by my man like Tammy Wynette” or not having “stayed home and baked cookies.”

“When she saw that something as seemingly innocuous as that cookie statement set off such a firestorm, it took me by surprise and it must have taken her by surprise, too,” said Cheryl L. Walker, a literature professor at Scripps College. “I think her strong commitments are the same, but she is definitely savvier, more cautious, and probably more cynical, than she was then. And actually, when she published her recipe, I made it, and it became the standard in my house, the ones my children liked best.”

Catherine Neal Parke, an English professor at the University of Missouri, said she saw her classmate’s life as a political and domestic allegory.

“She goes to a women’s college, gives that gangbuster graduation speech, then goes to Arkansas, continues her career in the stellar way, makes more money than her husband, has only one child,” Ms. Parke said. “Then she becomes the first lady, makes the cookies remark, tries health-care reform, but when it doesn’t work, she has to become the housewife of the White House, because that’s the required persona. Now that her husband’s out, though, she can go back to pursuing her own career.”

Of the marriage, Mr. Clinton’s affair with Monica Lewinsky and his impeachment, many classmates are reluctant to offer judgments. “I feel no need to draw any kind of conclusion,” Ms. Gidlow said. “It must have taken great perseverance to go on.”

Pamela C. Colony, a scientist who teaches at SUNY Cobleskill in upstate New York, said: “My husband thinks staying with Bill was a big mistake, but I have kind of mixed feelings. Part of me respects her for sticking with him, and part of me wonders why did she stick with him, was it for love-based reasons or political ones?”

Professor Colony and others sound rueful, too, about what they see as Mrs. Clinton’s political compromises. “She reaffirms for me the fact that as soon as you get into politics you have to compromise on your goals, if not your ideals,” the professor said. “It’s incredibly upsetting, but I think it’s a fact of life.”

High Stakes: Chávez Plays the Oil Card

April 10, 2007
new york times

By SIMON ROMERO and CLIFFORD KRAUSS
CARACAS, Venezuela, April 9 — With President Hugo Chávez setting a May 1 deadline for an ambitious plan to wrest control of several major oil projects from American and European companies, a showdown is looming here over access to some of the most coveted energy resources outside the Middle East.

Moving beyond empty threats to cut off all oil exports to the United States, officials have recently stepped up the pressure on the oil companies operating here, warning that they might sell American refineries meant to process Venezuelan crude oil even as they seek new outlets in China and elsewhere around the world.

“Chávez is playing a game of chicken with the largest oil companies in the world,” said Pietro Pitts, an oil analyst who publishes LatinPetroleum, an industry magazine based here. “And for the moment he is winning.”

But this confrontation could easily end up with everyone losing.

The biggest energy companies could be squeezed out of the most promising oil patch in the Western Hemisphere. But Venezuela risks undermining the engine behind Mr. Chávez’s socialist-inspired revolution by hampering its ability to transform the nation’s newly valuable heavy oil into riches for years to come.

As Mr. Chávez asserts much greater control over Venezuela’s oil industry, his national oil company, Petróleos de Venezuela, is already showing signs of stress. Management has become increasingly politicized, and money for maintenance and development is being diverted to pay for a surge in public spending.

During the last several decades, control of global oil reserves has steadily passed from private companies to national oil companies like Petróleos de Venezuela. According to a new Rice University study, 77 percent of the world’s 1.148 trillion barrels of proven reserves is in the hands of the national companies; 14 of the top 20 oil-producing companies are state-controlled.

The implications are potentially stark for the United States, which imports 60 percent of its oil. State companies tend to be far less efficient and innovative, and far more politicized. No place captures the shift in power to nationalist governments like Venezuela.

“We are on a collision course with Chávez over oil,” said Michael J. Economides, an oil consultant in Houston who wrote an influential essay comparing Mr. Chávez’s populist appeal in Latin America with the pan-Arabism of Col. Muammar el-Qaddafi of Libya two decades ago. “Chávez poses a much bigger threat to America’s energy security than Saddam Hussein ever did.”

Consider the quandary facing Exxon Mobil after its chairman, Rex W. Tillerson, recently suggested that Exxon might be forced to abandon a major Venezuelan oil project because of its growing troubles with Mr. Chávez.

The energy world took notice. So did Mr. Chávez’s government.

Only a day later, Venezuelan agents raided Exxon’s offices here in the San Ignacio towers, a bastion for this country’s business elite. The government said that the raid was part of a tax investigation, but energy analysts said the exchange of threat and counterthreat was all too clear.

Politics and ideology are driving the confrontation here as Mr. Chávez seeks to limit American influence around the world, starting in Venezuela’s oil fields. Mr. Chávez views the Bush administration as a threat, in part because it indirectly supported a coup that briefly removed him from power five years ago. Yet the United States remains Venezuela’s largest customer.

Mr. Chávez recently decreed that Venezuela would take control of heavy oil fields in the Orinoco Belt, a region southeast of Caracas of so much potential that some experts say it could give the country more reserves than Saudi Arabia. The United States Geological Survey describes the area as the “largest single hydrocarbon accumulation in the world,” making it highly coveted despite Mr. Chávez’s erratic policies.

By setting a May 1 deadline for what some foreign oil executives consider an expropriation, the Venezuelan leader risks losing Exxon, ConocoPhillips and other companies, which are loath to put their employees and billions of dollars in assets under Venezuelan management.

A departure of expertise and investment could weaken an oil industry already unsettled by being transformed into Mr. Chávez’s most crucial tool for carrying out his reconfiguration of Venezuelan society.

Mr. Chávez has raised taxes on foreign oil companies and forced other oil ventures to come under his government’s control. And he has purged more than 17,000 employees from Petróleos de Venezuela after a debilitating strike about four years ago.

The talks have bogged down over how much the oil companies’ stakes in four big Orinoco projects are worth, whether Venezuela’s cash-short oil company would pay for the assets in oil instead of cash and, most important, who would manage the reduced operations of the foreign oil companies.

Still prevented from producing oil in places like Saudi Arabia and Mexico, the companies desperately want to hold on to their Venezuelan reserves. Companies like Exxon, whose Venezuelan assets were nationalized in the 1970s and returned to it in the 1990s, know the pitfalls of operating here and figure that Mr. Chávez will not be around forever.

With oil prices at high levels, oil-rich countries as varied as Angola, Norway and Russia are also waiting to see how the talks unfold. Governments in Kazakhstan and Nigeria are trying to negotiate better terms with foreign oil companies as well. But none are doing so with Mr. Chávez’s revolutionary flourish.

“It is a defining moment,” said Christopher Ruppel, a geopolitical risk analyst at John S. Herold Inc., the energy consulting firm.

Last week, Rafael Ramírez, Venezuela’s energy minister, sent a chilling signal to the oil companies, saying Venezuela might sell refineries in Texas and Louisiana that process crude from Exxon’s Venezuelan oil fields. Analysts say Venezuela could be setting the stage to produce much less oil in ventures with American oil companies for export to the United States.

The oil companies decline to talk publicly about the negotiations, but people in the industry say Exxon and ConocoPhillips, two of the largest American companies in Venezuela, are digging in their heels. The companies, however, lack a united front: Chevron is expected to accept Mr. Chávez’s terms, since it is also negotiating access to a large natural gas project in Venezuela.

“If the majors want to negotiate a settlement, they have to be able to let Chávez save face and look like he has won this with his people,” said Michael S. Goldberg, head of the international dispute resolution group at Baker Botts, a law firm in Houston that represents many of the major oil companies around the world.

For decades, Venezuela has been a leading supplier of oil to American refineries, a resilient economic relationship that remains intact despite deteriorating political ties. Venezuela is the fourth-largest supplier of oil to the United States, accounting for more than 10 percent of American oil imports.

Once Venezuela’s heavy oil is counted, its reserves may surpass those of Saudi Arabia or Canada, though the oil will be worthless without ventures to extract it. American oil producers are drawn here by Venezuela’s 80 billion barrels of proven oil reserves, among the largest outside the Middle East.

But Mr. Chávez is chipping away at those ties by forming ventures with state oil companies from China, Iran, India and Brazil. Venezuelan exports of oil and refined products to the United States fell 8.2 percent to a 12-year low in 2006 of about 1.3 million barrels a day, according to the Energy Information Administration.

Meanwhile, Mr. Chávez has accepted higher shipping costs to reach China, expanding exports tenfold to about 160,000 barrels a day since 2004.

“If the United States wants to diversify its oil supplies for reasons of national security, then Venezuela should be allowed to diversify its customer base for the same reason,” said Mazhar al-Shereidah, an Iraqi-born petroleum economist who is one of Venezuela’s leading energy experts.

But even under the best of circumstances, China’s retooling of its refineries to handle Venezuela’s sour, or high-sulfur, crude oil could take five to seven years. And it is not clear whether Mr. Chávez’s new foreign energy partners are prepared to invest heavily until they are confident they can trust him.

In a country where many facets of life are politicized, output levels are no exception. Venezuela says it produces 3.3 million barrels a day, but OPEC officials say production is closer to 2.5 million, 1 million barrels less than in 1999 when Mr. Chávez’s presidency began.

No one sees an immediate crisis at Petróleos de Venezuela. But its windfall from high oil prices masks the devilish complexity and rising costs of producing heavy oil.

Meanwhile, the company acknowledged last month that spending on “social development” almost doubled in 2006, to $13.3 billion, while its spending on exploration badly trailed its global peers. And Petróleos de Venezuela’s work force has ballooned to 89,450, up 29 percent since 2001 even as production declined.

Independent analysts are alarmed by a troubling increase in explosions and refining accidents during the last two years, which authorities brush off as sabotage. Mr. Ramírez, the energy minister, declined repeated requests for an interview.

With heavily subsidized domestic oil consumption surging, the government spends an estimated $9 billion to keep gasoline prices under 20 cents a gallon. Moreover, Mr. Chávez uses Petróleos de Venezuela to finance other nationalizations, like its $739 million purchase of an electric utility in Caracas from the AES Corporation.

Petróleos de Venezuela’s cash is said to be running short as Mr. Chávez uses its revenue to cement political alliances with Bolivia, Cuba and Nicaragua. The company has borrowed more than $11 billion since the start of the year, a rapid debt buildup that reflects a wager by Mr. Chávez that oil prices will remain high indefinitely.

Simon Romero reported from Caracas, Clifford Krauss from Houston.

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Counselor To Gonzales Announces Resignation

Goodling Had Refused to Testify on Prosecutor Firings
By Dan Eggen
Washington Post Staff Writer
Saturday, April 7, 2007; A01

The senior counselor to Attorney General Alberto R. Gonzales submitted her resignation yesterday, becoming the third high-ranking Justice Department aide to quit in the aftermath of the firings of eight U.S. attorneys.

The departure of Monica M. Goodling, 33, comes two weeks after she first refused to answer questions from Congress about the firings, invoking her Fifth Amendment right against self-incrimination.

Goodling's resignation also comes amid signs of sinking morale in some U.S. attorney's offices. In Minneapolis, three top managers staged a revolt Thursday, choosing to demote themselves rather than work for the newly confirmed U.S. attorney there, who is a former Gonzales aide, officials said. The department was so alarmed that it sent a Washington-based Justice official to Minneapolis this week to try to talk the three out of their plans, officials said.

Democrats on the Senate Judiciary Committee also stepped up their demands yesterday for hundreds of pages of unreleased records related to the firings that the Justice Department has deemed too sensitive for release to Congress.

Gonzales, meanwhile, has largely disappeared from public view as he prepares for a crucial April 17 appearance before the committee to explain his role in the firings.

Seven prosecutors were dismissed in December and another was removed earlier as part of a plan set in motion by the White House to replace U.S. attorneys viewed as insufficiently loyal to President Bush or his policies. Gonzales has sought to minimize his role in the firings, but recently released documents and testimony show he was regularly briefed on the effort.

Goodling's departure follows the resignation last month of D. Kyle Sampson as Gonzales's chief of staff. Sampson went on to testify before the Judiciary Committee that Gonzales was more directly involved in the firings than he had acknowledged, and that the attorney general was aware of proposals to circumvent the Senate confirmation process for some U.S. attorneys.

The Justice official who carried out the firings, Michael A. Battle, also left the department last month. Battle and other department officials have said his departure was not connected to the dismissals.

"Attorney General Gonzales's hold on the department gets more tenuous each day," said Sen. Charles E. Schumer (N.Y.), who has been among the most vocal Capitol Hill Democrats calling for Gonzales's resignation.

Sampson and Goodling worked closely together on the firings, particularly in the case of an Arkansas prosecutor removed to make way for a former aide to presidential adviser Karl Rove. Both participated in briefings for Deputy Attorney General Paul J. McNulty and others prior to testimony before Congress that has since been shown to be inaccurate.

Goodling and her attorneys have cited McNulty's complaints about her role in those briefings as a key reason for her refusal to testify.

In a letter late yesterday to Sens. Patrick J. Leahy (D-Vt.) and Sheldon Whitehouse (D-R.I.), the Justice Department said Goodling's departure renders moot any concerns about conflicts between her and others who remain employed at Justice.

Acting Assistant Attorney General Richard A. Hertling also wrote that Gonzales and McNulty have "taken steps to ensure that no actual or apparent conflict of interest would arise" in connection with the prosecutor firings.

Another conflict erupted this week between Justice and Democrats over other records connected to the firings that have not been released to Congress. The committee is set to approve subpoenas Thursday demanding the release of those records, along with uncensored versions of previously released documents.

"We are trying to get to the truth," Leahy, Schumer and Sen. Dianne Feinstein (D-Calif.) wrote in a letter to Gonzales yesterday. "Documents should be provided without restrictions on disclosure so that they may be used to question witnesses -- including yourself -- on any issue that is an important part of our inquiry."

Throughout the week, Gonzales has been reaching out to lawmakers, predominantly House Republicans. Aides on Capitol Hill confirmed that the attorney general spoke with Rep. Chris Cannon (Utah), the top Republican on a Judiciary subcommittee, and to Rep. Roy Blunt (R-Mo.), the minority whip and a close ally of Christian conservatives, who in the past have not been outspoken in support of Gonzales.

The discontent in Minnesota centers on U.S. Attorney Rachel K. Paulose, 34, who previously worked for Gonzales and his deputy, McNulty. She is part of a wave of more than a dozen Bush administration insiders appointed as federal prosecutors over the past two years, according to government records.

Paulose said in a statement that "the management team supports the decision of the three to step down" and that "the community will benefit from their focus on prosecuting high-profile, sophisticated cases in the years to come."

"We have work to do," Paulose said. "The office remains focused on our law enforcement priorities and service to this community."

David Schultz, a law professor at Hamline University in St. Paul, Minn., said the Minneapolis U.S. attorney's office had been relatively free of discontent in recent administrations.

"You never really hear political rumblings out of that office, so it comes as some surprise to see three people step down like this all at once," Schultz said. "It raises the question of whether attorneys are starting to become uncomfortable about the politicization that seems to be going on at Justice."

Paulose replaced veteran prosecutor Thomas B. Heffelfinger, who served as U.S. attorney under both President Bush and President George H.W. Bush. Heffelfinger abruptly resigned early last year to enter private practice.

Heffelfinger has said that he does not know whether he was slated for removal. E-mails from Sampson indicate that two U.S. attorneys targeted for dismissal resigned in early 2006; Heffelfinger is one of two who quit during that time to enter private practice. Heffelfinger declined to comment yesterday.

Paulose has drawn complaints from taxpayer advocates for an allegedly lavish "investiture" ceremony held last month to commemorate her confirmation as U.S. attorney, although Justice officials say the cost to the department was only $225. Paulose has also gained attention for her aggressive efforts to obtain "righteous sentences" in child pornography cases.

Washingtonpost.com staff writer Paul Kane and Washington Post staff researcher Julie Tate contributed to this report.